Business Analysis: The challenge: end cervical cancer. The prize: a £40bn drugs market

The race is on to develop a revolutionary vaccine and GSK is having to play catch-up
Click to follow

The Race is on to produce "the biggest vaccine ever": a jab that will protect women from the virus behind two-thirds of all cervical cancer, could save more than 1,000 lives a year in the UK alone, and one which might eventually bring an end to the era of the routine smear test.

The Race is on to produce "the biggest vaccine ever": a jab that will protect women from the virus behind two-thirds of all cervical cancer, could save more than 1,000 lives a year in the UK alone, and one which might eventually bring an end to the era of the routine smear test.

The market for such a revolutionary product could be worth £40bn over the lifetime of a mass vaccination programme and could transform the financial fortunes of the companies that are developing it. But the division of the spoils will not be even, and to the victor of the race to launch first will go the lion's share of the market.

Which is why Merck, the embattled US pharmaceutical giant, promised yesterday to accelerate the large-scale human trials that will prove whether its vaccine - called Gardasil - can be approved for launch. Raymond Gilmartin, Merck's president, said it is now aiming to file for approval in the spring of next year, with a launch about a year after that.

Merck has been stung by the claim of GlaxoSmithKline, the UK's biggest drug maker, to now be just "months rather than years" behind. GSK has dramatically accelerated its work and last month brought forward the date when it plans to file for its first regulatory approval, previously 2008, to 2006, saying it recruited volunteers to its trials much faster than expected. The GSK vaccine, Cervarix, could be widely available in Europe within three years and the United States won't be more than a year behind.

It is Jean-Pierre Garnier, the chief executive of GSK, who has described a cervical cancer vaccine as potentially the biggest ever. Indeed, he thinks it might become one of the biggest selling pharmaceutical products of all time.

Both companies' vaccines work in the same way. They mimic strains of the sexually transmitted human papillomavirus (HPV), which causes 70 per cent of cervical cancers. Because they stimulate a response by the immune system, it can then fight off the virus.

At least 50 per cent of women in the West are believed to have been exposed to HPV, which sometimes causes genital warts, but the majority are unaware of it as they do not show any symptoms. In 1 or 2 per cent of cases it goes on to cause abnormalities in the cervical cells, which may develop into cancer. In the UK, women are invited to take a regular smear test every three to five years from the age of 20, but 1,600 a year die still from the disease. Worldwide, cervical cancer kills 288,000 women every year.

Vaccines have traditionally been seen as an unattractive area for pharmaceuticals companies, because manufacturing is complex and costly but selling prices are low. Yet analysts already expect peak sales of about $1bn for these cervical cancer products, and have been told by Dr Garnier to move them much higher.

Kevin Scotcher, a pharmaceuticals sector analyst at SG Cowen, the investment bank, said the gap between the first launch and that of the rival will be crucial for assessing relative sales. "The winner will have longer to get people used to using its vaccine, and the gap will give people more of a chance to learn about its effectiveness in the general population."

Both Merck and GSK, for different reasons, need their vaccine to be a hit. Mr Gilmartin is looking to save the company from oblivion after Vioxx, its arthritis painkiller, had to be withdrawn from the market on safety fears, opening the door to vast but as yet unquantifiable compensation claims. He has accelerated the development not just of Gardasil but of several other vaccines in its pipeline.

At GSK, a previous generation of blockbuster products has lost patent protection, and the City has proved sceptical that the company has anything similarly lucrative to fill the hole.

Both companies have published impressive data on the effectiveness of their vaccines in trials involving thousands of women, and now much larger studies are under way. There is also work being done inside both companies on adding additional strains of HPV to the vaccine, so that it might prevent more than 70 per cent of cancers.

Two other drug companies are working on similar products, StressGen Biotechnologies of Canada and France's Transgene, but both are still working on 30-patient proof of concept studies and are several years behind the big two.

Many of the highest scientific hurdles have been jumped by GSK and Merck now, but there are political ones that remain. Getting the drug to market will be no good if governments do not agree to vaccinate adolescents, and there will be other questions over the age ranges of other women to be given the shot, and on whether men also should be.

Dr Garnier is undaunted: "This is going to be a mandatory vaccine. When you have a cancer cure, you don't have to lobby hard. If you are the minister of health and this vaccine is available, you have got to mandate it."

Of course, Dr Garnier's high-profile championing of the vaccine ought to generate useful political pressure. In the US, Merck and GSK will have to fight the battle state by state because, although the federal government will issue influential guidelines, states make the decisions on school vaccination programmes.

His confidence of success is not universally shared. SG Cowen conducted a survey of 27 health authorities (all but two were US states) last week which found 70 per cent saying they would be unlikely to introduce Gardasil or Cervarix as a mandatory jab.

There will be particularly hard bargaining on the price that the companies could charge for a course of the vaccine, with most states envisaging a price closer to $50 than the companies' hopes for $150-plus, which would put the jabs at the premium end of the vaccines market.

In addition, some groups on the religious right, including Concerned Women for America, the Family Research Council and other supporters of abstinence, have already signalled their opposition to a vaccine that, they argue, gives the green light to sexual promiscuity.

One final complication is the muddy situation with regards to patents on the vaccine and the way it is made. There appear to be significant overlaps that suggest one or both might infringe the other's patents. The pair are talking, so far amicably, about a "cross-licensing" deal to prevent the expense and potential delays to launch that could be involved if the matter had to be settled in the courts. Even if no money changes hands in the event of that deal, neither will enjoy the full profits of the vaccine: both licensed in the product from a smaller drug company, Merck from CSL of Australia and GSK from Medimmune of the US. They will have to pay royalties, likely to be single-figure percentages of sales.

The end of the routine smear test, feared and loathed by women across the Western world, is still several large steps and many years away. The prospect of a new burst of blockbuster profits for the pharmaceuticals industry is slightly nearer. Most of all, the success of these vaccines would be a much-needed shot in the arm for an industry which has rapidly lost public trust and even doubted itself whether it could continue to produce innovative pharmaceuticals for the mass market and multibillion-pound earnings for shareholders.